RIM can't catch a break. Not only is the company coping with dismal PlayBook …

RIM can’t catch a break. Not only is the company coping with dismal PlayBook tablet sales, it’s also taking a near half-billion-dollar hit for sitting inventory that must now be sold at rock-bottom prices.

RIM announced on Friday that the company wouldn’t be meeting its financial targets for the year, primarily due to the unsuccessful performance of the BlackBerry PlayBook tablet. It pushed 150,000 units this quarter, compared with 250,000 last quarter, and 500,000 in the first quarter of the year.

The company is offering the troubled tablet for dramatically discounted prices through Dec. 3. Prices were slashed $300 across the product line-up, and quickly sold out at retailers like Best Buy by last week’s Black Friday. Nonetheless, RIM announced today that it’s recognizing “a pre-tax provision in the third quarter of fiscal 2012 of approximately $485 million, $360 million after tax, related to its inventory valuation of BlackBerry PlayBook tablets.”

Quick to note an “increase in demand,” RIM’s co-CEO Mike Lazaridis offered up continued support for the tablet.

“RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy,” he said in today’s press release. “Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise.”

RIM’s BlackBerry PlayBook jumped on the tablet trend a bit prematurely. The device had a number of software issues right out of the gate, most notably problems with Flash content. It garnered lackluster reviews that led to a limited distribution network as carriers like Sprint opted not to sell the device.

And no, RIM’s PR troubles don’t end with substantial loss warnings. In a microcosmic example of adding insult to injury, a couple of its employees just sparked an international incident.

A pair of RIM employees on a non-stop, Beijing-bound flight knocked back a few too many drinks and started misbehaving so badly that the plane turned around and dropped them off in Vancouver. Due to industry regulations regarding the number of hours a flight staff can work, the flight, which originated in Montreal, was grounded for 18 hours and its 314 passengers were put up in hotels for the night.

The two RIM employees were arrested for their behavior, and have to pay Air Canada a fine of $35,878 each. They’re also on one-year probation from flying Air Canada, and are suspended from RIM pending further investigation.

And nor do they deserve to. No company deserves to catch a break - they should all be out there making their own luck, not hoping things work out for them.

All you need to know in why RIM has failed to adapt to the changing market is encapsulated in their having two CEOs. That alone shows they have deep, fundamental management problems. It's not responsible for their failures, but hopeless management plays a key part.

Too bad all of these companies are so surprised by the dismal sales. When you come to the tablet market way late to the game and then you have to compete against Apple who is controlling tablet sales and does not have to discount its products. You have to ask yourself if your RIM. Why in their right minds would try and throw together a tablet and expect to sell them at or above the Apple price?

A lot of people are interpreting this as a loss of 485 mn on the playbook. I think this may be a misinterpretation. Let's assume playbooks cost 300 to make, we're planned to be sold at 500 but are now being marked down to 200 to clear inventory.

When RIMM first manufactured these they added $500 to their inventory. Now that they are selling them for $200 they are reducing inventory by $300 for each playbook. That doesn't mean that each playbook is losing them $300. It means it is only losing them $100. So assuming these numbers the $485mn write down may only represent a loss of approx $162mn. And for the playbook as a whole, if they sold around 1mn at the $200 profit before the fire sale (total profit on 1st mn being $200mn) they would have ended with a $38mn profit for the entire playbook line, despite the fire sale.

A lot of people are interpreting this as a loss of 485 mn on the playbook. I think this may be a misinterpretation. Let's assume playbooks cost 300 to make, we're planned to be sold at 500 but are now being marked down to 200 to clear inventory.

When RIMM first manufactured these they added $500 to their inventory. Now that they are selling them for $200 they are reducing inventory by $300 for each playbook. That doesn't mean that each playbook is losing them $300. It means it is only losing them $100. So assuming these numbers the $485mn write down may only represent a loss of approx $162mn. And for the playbook as a whole, if they sold around 1mn at the $200 profit before the fire sale (total profit on 1st mn being $200mn) they would have ended with a $38mn profit for the entire playbook line, despite the fire sale.

Is that how it happens in America? A write down of $485m is actually a loss of $162m? In Australia, a loss of $485m is a loss of $485m. I guess our auditors aren't working hard enough over here. Or maybe we are, and that is why the GFC v2 isn't hitting Australia as hard.

A lot of people are interpreting this as a loss of 485 mn on the playbook. I think this may be a misinterpretation. Let's assume playbooks cost 300 to make, we're planned to be sold at 500 but are now being marked down to 200 to clear inventory.

When RIMM first manufactured these they added $500 to their inventory. Now that they are selling them for $200 they are reducing inventory by $300 for each playbook. That doesn't mean that each playbook is losing them $300. It means it is only losing them $100. So assuming these numbers the $485mn write down may only represent a loss of approx $162mn. And for the playbook as a whole, if they sold around 1mn at the $200 profit before the fire sale (total profit on 1st mn being $200mn) they would have ended with a $38mn profit for the entire playbook line, despite the fire sale.

Is that how it happens in America? A write down of $485m is actually a loss of $162m? In Australia, a loss of $485m is a loss of $485m. I guess our auditors aren't working hard enough over here. Or maybe we are, and that is why the GFC v2 isn't hitting Australia as hard.

1) I don't know if this is true. I am trying to find out if this hypothesis is correct. 2) a loss of 485mn is a loss of 485mn even in the US. However, write down != loss. Even in Australia. You can look it up in your Australian English dictionary. 3) finally, RIM is based in Canada, and follows Canadian accounting principles, not American ones.

Is that how it happens in America? A write down of $485m is actually a loss of $162m? In Australia, a loss of $485m is a loss of $485m. I guess our auditors aren't working hard enough over here. Or maybe we are, and that is why the GFC v2 isn't hitting Australia as hard.

Write-down, as far as I understand is more like repositioning expected value of an asset; so not really a loss. It probably hurts just as much though.

It seemed to me like they couldn't make up their mind if it was a standalone tablet or an addon for a Blackberry. In fact I'd almost bet there were warring factions within the company over it. I know I've seen plenty of people excuse the lack of an email client or the crippled USB port and lack of a card reader by saying "I just bridge it to my Blackberry phone." Advice which is obviously less than useless for people without one.

Why they think they could be successful when their potential customer base is really only a subset of people who already own another Blackberry device is beyond me. Strategic planning via wishful thinking maybe.

If they were smart they would have popped out a quick and dirty IMAP and POP email client that didn't link into the BIS/BES Blackberry email system to keep the critics quiet. Anyone who has a Blackberry phone is fine with the PB not having a client as they can bridge, if you don't have a BB phone why not just use a simple client? The best is the enemy of the good. Boneheaded RIM management!

I have one and love it, it's a no-brainer at $199, not so much at $499 as they found out.

Well, PR is fine and all, but I don't like how people associate the acts of two drunken men with the company's. What if I was the owner of a company and two of my employees got drunk and rampaged somewhere. It's not like it's representative of what my company would be trying to sell, nor would it be my company's fault or responsibility.

Is that how it happens in America? A write down of $485m is actually a loss of $162m? In Australia, a loss of $485m is a loss of $485m. I guess our auditors aren't working hard enough over here. Or maybe we are, and that is why the GFC v2 isn't hitting Australia as hard.

Write-down, as far as I understand is more like repositioning expected value of an asset; so not really a loss. It probably hurts just as much though.

Maybe accounting-wise they took ($expected selling price * inventory) and added that to their value somewhere, and now have to deduct that. It could be rolling back a "paper gain." (Obviously, I'm not a CPA, just guessing.)

I can't think of a good thing Mike Lazaridis has done for RIM/Blackberry recently. I think it's time for him to move on and for someone with more vision and a real grip on implementation, who can play to the Blackberry ecosystem's strengths of security rather than chasing his tail looking for the latest trend, to take the reins at RIM.

Eh, I'm still waiting for my Playback to ship. So much for that warehouse theory.

BTW, play with the Fire and try to convince anyone it is a decent tablet. I will admit the Nook Tablet is fine, but at $199, the playbook was the obvious choice, especially if you already have a Blackberry.

I'm just going to use the browser and play video podcasts on it. My needs aren't great. For ebook, I'd get one of those eink devices.

Regarding Android, I don't want google spyware. Ipad? Forget it. I can't stand itunes on a PC, and Apple gear is so overpriced. They should make it in China to cut costs...oh never mind

The Playbook's problems are pretty simple : it was too expensive and runs a proprietary OS people aren't willing to take a chance with in case it gets canned. The hardware is fine and highly competitive (although IMHO, 7" is a little small for screen size), but not worth £500 by any stretch. Cutting the price, and unlocking/rooting the OS would help considerably by making potential buyers less wary of RIM ditching it.